Brexit to barely impact Thales, chief financial officer says

Postcards featuring the World War II British slogan "Keep Calm and Carry On" are seen outside a newsstand in London on June 24, 2016. (Leon Neal/AFP via Getty Images)

PARIS — Thales expects to see little direct harm from Britain’s planned exit from the European Union, as there is scarcely any trade flow between its British subsidiary and the rest of Europe, according to the company’s chief financial officer.

“We, unlike other groups, which have trade flow between Europe and the U.K., have practically no flow,” Pascal Bouchiat told Defense News on the sidelines of a March 6 media conference on 2017 financial results.

The raising of customs barriers between Britain and the EU would have no effect on Thales, as the U.K. unit is autonomous and focuses on defense products, and does not trade heavily with continental Europe, he said.

Arms are sold to the British government and then exported directly to client nations worldwide.

Britain is the third-largest defense market for Thales, and the company expects that country to remain so, according to Chairman and CEO Patrice Caine.

There is, however, concern over the potential impact of Brexit, which could weaken the British economy and, in turn, hurt the defense budget, Bouchiat said.

Brexit has prompted a sharp fall in sterling against the dollar and the euro, which boosts the cost of arms imported into the U.K., he added, something that could prompt Britain to build a strong domestic defense industry.

Britain’s departure from the single customs market has, however, sparked grave concern with Airbus, which builds the wings of A400M military airlifters and airliners in the U.K. There has been little clarity on the paperwork and customs duties that will likely be needed for shipping equipment for assembly across the English Channel.